BIR’s public shaming of doctors print ad – brilliant ad, disparaging to doctors & it can be banned from publication

this is Part 2 : BIR’s public shaming of doctors print ad is disparaging to doctors and the profession

this print ad has gotten thousands of reactions from pinoy netizens on the very first day the ad was published. not surprising, many of the negative reactions, angry even came from doctors themselves. non-doctor netizens also gave a lot of reaction to the ad almost in the same intensity and content – some liked the ad, others didn’t.

this i think is the first public shaming ad published in the philippines. it is the first of its kind that we have seen in our entire career. there have been other shaming activities  done in the philippines but not an advertising campaign like this one.my non-scientific scanning of the reactions to the ad i think are mostly negative where they are saying they do not like the ad. this is not surprising. i think the negative reaction to the ads both by doctors and non-medical netizens is a result of the tone and concept of the ad – it is public shaming of a group of people.

we have heard  alfredo lim’s shaming campaign against frug pushers when he was interior secretary where he spray painted the homes of suspected drug pushers to identify the occupant as one.

“shaming” of tax cheats is one of the intended objectives of this print advertising campaign. the question of course is will shaming the doctors get them to pay the appropriate taxes?

the number 1 objective of any ad campaign is to get the target audience to take action after seeing the ad. volume sales, market share increase or attitude change are the goals of advertising. for this particular ad, the intended action is for doctors to finally pay the right amount of taxes on their earnings.

another objective of ads, in the top 2, is to create awareness. this ad has done extremely well on the awareness part as we can see that it is the key topic talked about of almost everyone exposed to media, both in the internet and traditional media. the ad and accompanying controversy it created led to it being front page headline news at the Philippine Daily Inquirer on March  4, 2014 .

the kind of exposure it got and the resulting discussions obviously had this ad over-achieving its objective of creating awareness on the importance of properly paying your taxes. we think on this alone the BIR and the ad agency that developed it should look at the ad as a huge success.

high awareness is the first step before action. with awareness very high, will the doctors take action and stop cheating the BIR and start paying the correct taxes?

that is actually left to be seen. we suppose the BIR has some way of tracking whether this public shaming ad campaign will generate more taxpayers to pay the right amount of taxes. an increase of 10% will be a great achievement.

filipinos are big on reputation. things like protecting  or preserving the good name of the family is important to us as a race. this is even more important for doctors. doctors get their patients on the basis of their reputation. we know of names of doctors who are good in certain fields of specializations.  while they have not been specifically named in this ad, we think this ad will have the effect it intends to achieve and will succeed on getting more doctors to pay the right taxes.

aside from avoiding an even indirect slight to their reputation as doctors, this ad will signal to the doctors that the BIR in the next tax filing will closely scrutinize the tax returns of doctors. the BIR with this ad has put the doctors on notice. that should instill some kind of fear on the doctors. we won’t be surprised if many doctors have hired accountants in the past days to have their tax returns professionally and accurately prepared in the next tax filing which is in a few weeks time.

the doctors feeling shamed and insulted by this ad has merit. i think the ad do disparage the reputation of doctors. the key problem of the ad is that it does not have a disclaimer that not all doctors are tax cheats. all it has is this fictitious name of a doctor and this one ad talent appearing to be a doctor. the ad even without directly saying it generalizes ALL DOCTORS to be tax cheats. of course not all doctors are tax cheats.

releasing just this one ad first obviously singles out doctors. we only get to know that there are two more versions only from news articles on interviews done by BIR chief Kim Henares. the ad could have just featured the “generic tax cheat”, not identifying specific professions and that could have removed the problem of disparaging the practitioners of the medical profession. but if that was done we do not think it will be as provocative and effective as this ad is.

PMA president: ‘We are not tax evaders’
http://newsinfo.inquirer.net/582198/pma-president-we-are-not-tax-evaders

the print ad actually talks about doctors as tax cheats which has nothing to do with their medical skills and reputation.  but regardless, it is understandable that the doctors feels slighted by the print ad. for people who belong to a profession where reputation gets you business and your livelihood, even a indirect insult can have the same intensity.

>> more to come <<

~~~ mindscape landmark ~~~
carlo arvisu

Read here :

Part 1 : BIR’s public shaming of doctors print ad is brilliant, it should win an ad congress award for excellence
https://wawam.wordpress.com/2014/03/04/birs-public-shaming-of-doctors-print-ad-brilliant-print-ad-disparaging-to-doctors-it-can-be-banned-from-publication/

BIR’s public shaming of doctors print ad – brilliant print ad, disparaging to doctors & it can be banned from publication

Part 1 : BIR’s public shaming of doctors print ad is brilliant, it should win an ad congress award for excellence

the BIR just launched what i call the “public shaming of doctors” (PSoD) ad campaign, above is the first print ad of the campaign. this doctor ad apparently is the first of three ad executions, with the accountants and online sellers being the next to be featured in two more ads. last night, i saw on GMA7 the TV version of the PSoD using accountants. we are assuming there are  2 more TV ad versions to come with doctors and online sellers.

the print ad has these elements :

> it features a doctor literally sitting on the shoulders of a teacher in a classroom setting

> the concept revolves the idea of tax cheats are a burden to honest taxpayers, in this ad represented literally as being put on the shoulders of the teacher. we all know that teachers in the philippines are not paid very well and yet their jobs are very important, very difficult and impacts the nation specially the youth in very significant ways. doctors on the hand we know to be high income individuals. we know that first hand through the professional fees we pay them in every visit to their clinics and when we need to pay hospital bills.

– the ad even includes a computation of the salaries and taxes paid by doctors and teachers where we see in very glaring numbers, shocking even that the doctor who earns much higher pays much lower taxes than the teacher.

– the ad ends with the tagline : “When you don’t pay your taxes, you’re a burden to those who do.”

from an advertising point of view we think this print ad is brilliant! we think it should win an award in the next ad congress.

> the ad’s message is very provocative. provocative is one of  the top 3 qualities that you want in an ad to be. it is in the top 3 by which you measure the effectiveness of  an ad. the responses and reactions it has been getting in social media and traditional media, both from doctors and citizens have been massive, for or against the ad, a good indicator of provocativeness (sic) for this kinds of ads.

>the ad concept and the visuals communicate the message very well and with ease. just by looking at the visuals, you understand the message of the ad.

the only push  back we have and this it is a minor one on this ad is the execution of the ‘burden”. we thought the ad could have been more effective if it showed more ‘burden” being suffered by the teacher.

i am guessing the ad agency thought of it but they probably decided against it as they probably knew it will be a controversial ad and pusing the burden more in the visuals might make the ad too much to bear for the audience.

> the strategy of the ad was spot on – the impact of tax cheats on taxpayers is real and full of credible and strong insight. the ill effect of the actions of tax cheats is not just on the government but also on individual citizens. being the weak link makes everyone else in the link weaker and burdened.

> the choice of the doctor and teacher for this comparison was brilliant and very effective, quickly understandable to the audience. almost by rote, we know that doctors are one of the highest paid in the country and teachers are one of the lowest paid.

we know of the doctors as we have our own experiences to base it on. for a visit to the doctor, we pay anywhere from P400 to P1,200 every consultation depending on the specialization and reputation of the doctor. those consultation fees are nothing when we or members of our family are hospitalized or God forbid goes through surgery. surgery fees of doctors range from P5T to P200T depending on what the surgery is.

our own experience also tells us the doctors we see almost always do not voluntarily issue official receipts after a consultation. they issue one only when we ask.

we know of teachers as we have read about them – on how their pay is so low and yet they do a lot of hard work, their roles important and even critical to nation building and to our children.

the doctor versus the teacher simply put gives an excellent and concrete contrast for the purpose of communicating disparities and burden.

>> more to come <<

~~~ mindscape landmark ~~~
carlo arvisu

a lawyer’s exhaustive take on Manny Pacquiao’s tax problems or “why Pacquiao’s lawyers & accountants failed him”

verbatim:

—

A LAWYER’S TAKE ON PAQUIAO-BIR BOUT: AN INSTANT LESSON ON TAXATION 

Reposted below is Atty. Raymund Fortun’s discussion.

What DOES the law say?

The Bureau of Internal Revenue (BIR) levies income tax on taxable income from within and outside of the country on all citizens of the Philippines, even those working abroad. Of course, another country (e.g. the US) also has the right to tax people for incomes earned within its jurisdiction. In order to avoid the unfair situation where a Filipino earns income abroad and taxed there and is subsequently obligated to pay taxes for the SAME income as a Filipino citizen, the Philippines and the US have an income tax convention as early as 1976, providing for “Relief from Double Taxation”. So without having to bore you all with details, it is possible for a Filipino working abroad to be slapped with taxes by the US, but can use this fact as a “Tax Credit” in filing his income tax return

in the Philippines.

So what does the Pacman have to do to avoid being taxed twice?1. He has to pay taxes in the US for income earned therein.

2. He has to secure the official IRS form that the taxes have been paid. A CERTIFICATION FROM TOP RANK BOXING JUST WON’T DO.

3. He has to file an income tax return in the Philippines for the year covered. NOTE that the Pacman has other incomes aside from boxing, such as TV advertisements, product endorsements etc.

4. He has to submit the IRS “tax-paid” form and other tax-withheld forms to support his claim that he should only pay X amount of tax.

5. He should answer in a timely manner all letters sent by the BIR, including assessment notices.

6. If he does not agree with the assessment, he should then avail himself of legal remedies as provided under the Internal Revenue Code.

If he did NOT do any of these, then the BIR has the right to impose the appropriate tax on him, and to run after his properties in the process. Again, it must be stated: DURA LEX, SED LEX. The law is harsh, but that is the law. If the Pacman violated the law, then he should be held answerable.

In response to some of his followers’ queries, Atty. Fortun provided these additional explanations.

1. The obligation to file an income tax return belongs to the taxpayer; it is NOT the taxman’s job to make inquiries to another taxing authority. I am certain that several notices/letters were sent to Pacman to explain his incomes and taxes due before the Writ of Garnishment was issued.

2. What Pacman should have done is demand from Top Rank the Certification of Tax Withheld (W-2 in the Philippines) and, if this was not given, to secure from the IRS the needed form. I’m certain that Pacman has good lawyers and accountants to make the proper filings before the problem became too big.

3. Tax liabilities NEED NOT reach the point where the BIR has to issue a Writ of Garnishment.

BIR chief Kim Henares

Most taxpayers who are caught not paying the proper taxes just resort to SETTLING THEIR TAX LIABILITY through compromise agreements. The reason why the BIR went hard at Pacman because he appears to have ignored the various assessment notices issued, or even paid under protest man lang.

4. “Why me, when everyone is doing the same thing?” If there is anyone who is converting this into a political issue, it’s Manny Pacquiao. The issue is simple: DID HE PAY PROPER TAXES OR NOT? DID HE PROPERLY FILE HIS INCOME TAX RETURNS? If the answer to both questions is in the negative, then the BIR is correctly running after his winnings. Enough of the “maraming kurakot diyan na hindi dine-demanda”. If he knows of such corrupt people, point them out to the BIR so that they can also be subjected to tax notices.

5. People, just check the Pacquiao camp’s “defense”:

1. I just brought honour to the country, and this is what you repay me? How dare you!

2. There are other people who do not pay proper taxes, and yet i’m the one who is issued a Writ of Garnishment

3. Why have you not garnished the accounts of the senators in the PDAF scam?

4. I will make a loan just to give relief goods and visit Tacloban

5. I am with the opposition, hence, i’m being singled out

See? All preying on the public’s emotions.

The issue is really quite simple — IF HE DECLARED HIS INCOME PROPERLY, THEN THERE IS NO CASE REGARDLESS OF WHETHER HE’S IN THE OPPOSITION OR NOT, WHETHER HE WINS OR LOSES HIS FIGHTS. He has enough money to hire the best lawyers and accountants to fix his tax problems BEFORE they became problems. That’s the difference between him and Lucio Tan — LT hires the best people to make sure that he does not have any legal issues with the government.Re: the PDAF scam, please be informed that the BIR has already filed a tax evasion case against Janet Napoles, her daughter and brother. As to the senators/congressmen, their time will come. However, it may be more difficult to file tax evasion cases because there is no paper trail (as BenHur Luy and the other whistleblowers have testified). When there is no declared income, the BIR cannot just tax. Manny Pacquiao’s fight purses, on the other hand, are a matter of public record.

6. Question: “bakit nafreeze agad mga accounts nya? Bakit si Sexi and Pogi hindi nangyari yun eh may mga under declared din sila na mga income and properties…”

Because Manny’s case had been pending before the BIR for sometime. On the other hand, and to this day, nobody has admitted being Sexy and Pogi, and Jinggoy/Bong have denied having received any amounts. When the criminal cases have been filed with the Sandiganbayan, THEN and only then can the government move to freeze their accounts.

7. Question: “Bakit kung kaso ni Lucio Tan, hindi agad sila nag-issue ng WG? hanggang sa maapila yata ni Lucio Tan yung Tax Evasion at maging pabor sa kanya, walang WG n nilabas ang BIR. sabi nun tax expert from Las Vegas, taon daw **** inaabot if kukuha ka ng certified true copy sa IRS?”

I do not know the complete details of Lucio Tan’s case, but I have reason to believe that LT’s lawyers did the proper legal steps — filed a case before the Court of Tax Appeals and secured a TRO to prevent the issuance of a Writ of Garnishment. Simply put, smart ang mga abogado ni Lucio Tan.

I’m not too sure that i can accept the possibility that the US IRS is soooo inefficient that it would take years to issue a certified copy of a tax payment.

8. So now people question the timing. If the BIR enforced the WG before the fight, AND pacquiao got distracted enough to lose the fight, you would all be up in arms and say, “sana hinintay nyo na lang after the fight! Ayan tuloy, natalo!” The situation is called ‘damned if you do, damned if you dont’. Somehow, I accept the BIR’s move to enforce the WG after the fight.

I go back to the basic premise. If he filed his returns properly, we wouldn’t even be having this thread now. He has nobody but himself to blame.

9. Question: “Are you also implying sir that Filipino OFWs working in countries that have no income tax convention with the Philippine government are still mandated by law to pay income taxes with emphasis to the Middle East (wherein tax rates nearing 0%)?”

As a general rule, all Filipinos are obliged to file tax returns and pay taxes for income inside and outside the country. Thats the law.

10. TO ALL OFW’s:

According to Revenue Regulations No. 1-2011, the wage or income of an OFW that is earned out of the country is exempted from income tax. However, the earnings of an OFW from a business venture or any other property in the Philippines is subject to tax obligations.

Remittances from OFWs are also exempted from the documentary stamp tax (DST). However, according to BIR rule, in the case of OFW remittances sent through banks, the recipient is required to show proof of entitlement to DST exemption such as OEC or Overseas Worker Welfare Administration (OEC) certificate.

All OFWs also enjoy exemption from paying travel tax and airport fees, although they are required to show proof that they are legal migrant workers.

11. Pacquiao is “targetted” because his income is a matter of public record. Fight purses are announced even before the fight. The enormity of the amounts involved justifies the extra effort to collect. Finally, I cannot discount the possibility that politics has a hand in government actions. Whether this is a smokescreen to mask other existing (or future) issues is not for me to speculate on.

12. I saw Pacquiao’s interviews during the first day. He kept harping on the certification given by Top Rank. Posible na hindi lang sya marunong magpaliwanag siguro. But as a matter of legal practice, a Certified Copy is usually acceptable, and NOBODY asks for originals.

Lastly, income tax is based on gross income less expenses. Salaries and commissions are deductible expenses. Hindi ko po masasagot if Pacquiao, in his ITR, already deducted these expenses from his net income subject to tax.

13. Anyway, this tax case has been pending for 2 years. If indeed the BIR was asking for a DUPLICATE original, then it would not have been hard to: (1) inform BIR to give him time to secure the requested form, and/or (2) pay the necessary fee — US$50? — for the IRS to produce the needed form. Sa mga interviews ni Pacquiao or his lawyers, wala akong narinig that they sent BIR letters to explain why they could not produce the needed docs. That the Writ of Garnishment was issued shows that’s Pacquiao was given AMPLE TIME to defend himself/present documents but whatever he gave was not acceptable under the BIR rules.

14. Question: ” kapag ba hindi ka nagfile ng ITR sa BIR, automatic kakasuhan ka nila ng Tax Evasion?”

Oh yes! Dapat talaga mag-file Ng ITR kahit Zero pa ang tax na babayaran. More so yung mga high-profile na income earners. Madali po mahuli yung hindi nag-file Ng ITR kasi computerized po.

15. Question: “Well, Pacman is an easy target! why don’t we hear about false declaration of assets among celebrity politicians?

Because celebrity politicans are NOT the issue.

16. Early on I had said that Pacquiao’s income is a matter of public record. When boxers sign up for a match, the purses are made known to the public. This is beyond dispute and impervious to challenge.

Thus, when Pacquiao declared ONLY Php50 Million (less than $1,300,000) as income, it doesn’t take a rocket scientist to figure out that HE DID NOT FILE A CORRECT INCOME TAX RETURN. The 50M may probably only cover his income from product endorsements and TV commercials here in the Philippines. It is so clear that he did NOT declare his revenues (fight purse and pay per view) for fights abroad.

The BIR most certainly will send him a deficiency tax assessment. The legal remedy is to file a revised ITR and pay additional taxes thereon. The Writ of Garnishment is the end result of Pacquiao’s failure to pay his taxes properly.

17. I dont blame people for saying that politics is involved. But the fact of the matter is pretty simple: did he pay his taxes properly or not?

Does the government stay away from collecting taxes due, out of fear that people will point out that he supported a different candidate during the elections?

When is the right timing? If the BIR froze the accounts BEFORE the fight and Pacquiao lost, wouldnt people blame the BIR for the loss? It’s a “damned if you do, damned if you don’t” situation because of the personality involved.

18. Question: “Bakit sabi ni Henares sa PressCon nya, hindi na daw pwede i-revise yun ITR ni Pacquiao?”

He can’t revise it NOW because the process has run its course. He had a chance TWO YEARS AGO to do it.

It’s a tax case but a legal case as well. There are PERIODS for doing certain things. Once the period lapses, then a judgment becomes final. Pretty elementary po.

19. Comment: “BIR is now asking Manny to pay AGAIN! Double taxation is ILLEGAL.”

My main post is about the procedure to avoid double taxation. Tama po, it is unfair to be taxed twice. I am sure the IRS got its share. So it was just a matter of Pacquiao doing what our BIR requires — submit official docs to prove that he has been taxed. Apparently he did not. When the assessment came, his accountants/lawyers did not even protest; thus, the assessment became final.

Do note the government’s argument: Pacquiao only declared 50M as income in 2009. It is blatantly clear that he underdeclared. Sorry po, sana wag nyo paandarin ang conspiracy theories because the issue is so so simple.

20. People keep saying that Lucio Tan’s assets haven’t been frozen.

Lucio Tan hires the best lawyers and accountants to defend him and file the right docs. THAT, my friends, is the key difference. So please stop the Lucio Tan comparisons because, frankly, there is NO comparison.

21. Question: “Well the question still persist: do we have the accurate information with regards to this fiasco? What do we have: 50M as under declared income 2009 and supposed unprotested BIR assessment by Pacman’s lawyers and accountants…”

I believe that info is more than enough po. Do the math because you can easily verify it by googling it. How much was the purse of Pacquiao for his fight in 2009? More than Php50M ($1.2M)? He definitely did not declare properly. Don’t blame the accountants either. Remember: WE ALL SIGN OUR ITRs. Manny knew or ought to have known that what was filed was not accurate.

22. We are ALL commenting based on known facts. And yes, we should all concede that we dont have all the facts. That is why my main post says ” IF he did not do ANY of these…”. As you see, my opinion is a CLINICAL discussion of the law and the facts.

I wonder who is arguing on the basis of emotion and not on blind and simple logic…

23. The law is there, and laws are inherently for the good of all. HOW the law is applied defines the goodness of leaders.

Kaya I can accept people asking for compassion or maybe questioning the timing. In such instance, the law is not being questioned but HOW it was implemented here.

But “baket si Lucio, hindi nafi-freeze” or “kurakot ang gobyerno” or “pinupulitika si Manny” or “baket si Corona/Napoles” are fallacies in argumentation because they do not address the issue; instead, they point at ‘facts’ that do not in any way help in answering the real issue.

24. Kung nagkulang si Pacquiao kasi hindi nya binigay ang pruweba na nagbayad sya, then he should just own up to his stupidity instead of raising non-issues and playing with the public’s emotions.

25. Two things: (1) underdeclaration of income and (2) failure to present proof of payment. I am 100% sure na nagbayad si Pacquiao ng tax sa US but if he failed to declare properly AND/OR failed to give proper documentation, then he has nobody to blame but himself for his predicament.

26. The fact that he paid taxes in the US does not mean that he has NO tax liabilities in the Phils.

What he paid are for revenues in the US. He also has revenues in the Phils. One’s tax liabilities in the Phils = revenues in and OUTSIDE the Phils less expenses less tax credits. The higher your revenues, the bigger your tax liability. By declaring only 50M, malaking kakulangan sa gobyerno.

27. A news article says “DOJ junks tax case vs Pacquiao”.

That is a criminal complaint filed by the BIR in 2012 for Pacquiao’s alleged refusal to present his tax records. The case was dismissed on a technicality, i.e. the summons should be served on the person himself and, upon his refusal to receive, the BIR may resort to substituted service.

That dismissal by the DOJ has absolutely no bearing on the tax case for under declaration of earnings for 2009.

On a final note, Attorney Raymond Fortun says:
Pacquiao was one of the highest taxpayers in 2008. Then suddenly, he pays “just” Php7 Million in 2009. He instantly got “red-flagged” by the BIR. It wasn’t that BIR simply and suddenly didn’t want to accept the TopRank documents. Yung documents kasi, madaling intindihin kung ayaw talaga magbigay ang IRS. But it was the sudden drop in declared income that did Pacquiao in. When he declared “only” Php50 Million for 2009 despite the indisputable evidence of his earnings for 2009, then there was clearly an under-declaration of income. THAT is the super big problem that was never resolved until the BIR issued the Writ of Garnishment.

I hope this blog helps in keeping a record of what the good attorney does to make the law more understandable. I hope some points in this “clinical discussion of the law” finally answer Ira Panganiban’s open letter to Kim Henares. For Ira’s letter, google it.